Chevron CEO ordered to testify in fraud case against Ecuadoreans

Reuters Staff

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John S. Watson, Chairman and CEO of Chevron Corporation, speaks at the Council on Foreign Relations in New York, November 29, 2012. REUTERS/Carlo Allegri

(Reuters) - A judge on Tuesday ruled that Chevron Corp’s (CVX.N) chief executive must testify in the U.S. oil company’s fraud case against Ecuadoreans seeking to collect on a $19 billion judgment against Chevron related to rainforest pollution.

John Watson, who became CEO of Chevron in 2010 and had helped integrate Texaco after Chevron’s 2001 purchase of the company gave it ownership of the long-running Ecuador case, could give his deposition before an end-of-May deadline for evidence-gathering ahead of the October fraud trial in New York, a spokesman for the Ecuadoreans said.

“To be sure, the rancorous history of this litigation lends credibility to Chevron’s concern that the deposition has been noticed for purposes of harassment,” James Francis, a magistrate judge in federal court in Manhattan, wrote in his ruling. “On the other hand, there is little doubt that Mr. Watson has relevant knowledge.”

Beyond his monitoring of the litigation in the three years since he became CEO, Watson’s experience leading the integration of Chevron-Texaco likely gave him personal knowledge of the issues underlying the Ecuador trial, Francis wrote.

“This is far from a trivial case,” he added. “Enough is at stake to justify the deposition of an apex witness like Mr. Watson.”

Chevron said in a statement that it “will of course comply with all orders of the court as it participates in the discovery process that continues to expose the plaintiffs’ lawyers’ fraud.”

The Ecuadorean plaintiffs won the $19 billion-dollar judgment in their own country in 2011, after having first brought the case in New York court in 1993 before it moved to South America about a decade later. The environmental damage was supposedly caused by Texaco when it operated in Ecuador from 1964 to 1992.

Chevron says the Ecuador ruling is based on tainted evidence and therefore unenforceable. The Ecuadoreans have yet to collect on the award and are trying to enforce the judgment in countries where Chevron operates. Their action in Canada was halted by a judge there last week.

Francis also ruled that depositions could be taken from Edward Scott, general counsel of Chevron’s global upstream and gas group, and Kroll Inc, an investigative and risk management company that Chevron retained in connection with the various related litigations.

The case is Chevron Corp v. Donziger et al, U.S. District Court, Southern District of New York, No. 11-00691.